In one fell swoop last week, almost everything the media believed about Wall Street's heroes and villains was turned on its head. On the very day the papers were chronicling Eliot Spitzer's dalliance with prostitutes, news was breaking that Stephen Schwarzman was making one of the largest donations ever to a cultural institution. Suddenly, the Sheriff of Wall Street looked like an oversexed hypocrite, while the guy who supposedly symbolized everything wrong with the Street -- greed, excess and a taste for pricey crabs -- looked, well, not that bad at all. How did differentiating the black hats from the white hats become so confusing?
Nowhere was the confusion more apparent than in The New York Times, which both broke the Spitzer news and was handed the exclusive on Schwarzman's $100 million donation to The New York Public Library (which was foreshadowed in James B. Stewart's New Yorker piece on Schwarzman last month). Both stories adorned the paper's front page on March 11, of course, but we couldn't help but notice that the Schwarzman piece was accompanied by another page one story that day: "Buyout Industry, Once Booming, Staggers Under Weight of Debt." In that piece, we're told, rather gleefully, that the fortunes of the private equity moguls, "with their big paydays and bigger egos" are "plummeting." Exhibit A is Schwarzman's firm, Blackstone Group LP, which announced plunging profits the day before.
The story was curious on two fronts: First, why was the Times running what basically amounted to a Blackstone earnings piece on its vaunted front page? And second, why was it doing so only two days after a similar story, this one headlined "Tight Credit, Tough Times for Buyout Lords," ran on the front page of its business section? Did the paper have a death wish for private equity? Or was the Blackstone story, with its talk of big buyout egos and their impending fall, on page one to counterbalance the library donation piece? If that story hadn't run that day, would the earnings piece have been featured so prominently?
Of course, Schwarzman could have timed the release of the library news to act as an antidote to Blackstone's poor earnings announcement. After all, he has shown some media savvy of late, sitting for a lengthy interview with Stewart for what turned out to be a largely positive New Yorker piece and visiting a school in the Bronx, Times reporter in tow, after donating $5 million to the Inner-City Scholarship Fund. Whether that's enough to erase memories of stone crabs and hapless servants with squeaky shoes remains to be seen.
But look at Carl Icahn. His transformation from reviled corporate raider to revered shareholder activist was fully completed March 9, when no less than "60 Minutes" dubbed him, get this, Robin Hood. "If you have money in the stock market, chances are Carl Icahn has helped improve your bottom line," cooed Lesley Stahl. Icahn is "making money for the little guy."
Meanwhile, that other supposed champion of the little guy, Spitzer, has resigned as governor, as every New York newspaper, with the glaring exception of The New York Times, urged him to do March 11.
While other papers were calling for Spitzer's head, the Gray Lady was busy wringing its hands over those who might be engaging in some good old-fashioned schadenfreude. "A further tragedy here, beyond the personal one of the Spitzer family and the damage he has done to the reform cause, is that Mr. Spitzer's targets are now relishing their tormentor's torment," its editorial intoned. "Those on Wall Street who fumed at having to make their world fairer for ordinary shareholders can now chortle with satisfaction in their private enclaves."
The Times was right in that Wall Street was chortling. But its contention that Spitzer made the Street more fair for the little guy is off the mark. In the wake of Spitzer, there's less stock research available to retail investors than in the days of Blodget and Grubman. Some stocks go uncovered and conflicts persist. Yet the myth of Spitzer the Sheriff lives on, at least at the Times, even as his career takes what appears to be a fatal swan dive. It's amazing to think that the Sheriff who never sent a Wall Streeter to jail may face prosecution himself.